What does a company with bulging order books, plants running at full capacity, and a reputation of being the country’s leading automotive air conditioner manufacturer do when life seems just cool? Get hot under the collar in its bid to grow bigger and do better.
That was the position Subros Ltd found itself in a couple of years ago. It had reason enough to feel complacent, being the leading AC supplier to India’s largest car manufacturer Maruti Udyog Ltd (MUL) and also to Tata Motors, whose speedy sales ensured that Subros’ manufacturing plants remained fully utilised.
The ambitious Subros management decided to increase capacities and also set itself higher targets. The company now plans to increase its existing market share of around 42 percent to above 50 per cent and rope in new customers. Discussions are underway with German carmaker Volkswagen and also General Motors India to supply ACs for their forthcoming passenger cars in India.
“In terms of infrastructure expansion we are setting up two new plants — one each in Manesar and Pune. While the Manesar unit will cater to Maruti, the Pune plant is mainly for Tata Motors. Construction work is underway and both units are slated to be ready by mid-2006. We have recently bagged an order from Mahindra & Mahindra for a new project and we will be the single source,” says Shradha Suri Marwah, executive director.
Other than these upcoming facilities, Subros has three plants in Noida and one in Gurgaon. Manufacturing capacity has grown to a level of 500,000 AC units per annum and there is a plan to augment this to 1,000,000 per annum by 2007. The company has also set up an R&D centre in Noida which has 110 personnel. “There was a big need for an R&D centre. Over time we felt that we must be self-sufficient in design and validation. As a joint venture with Denso Corporation of Japan, from whom we have derived most of our technology, we know we must invest in our own R&D. One cannot keep on getting technology. So we took a conscious decision three years ago to do so and we have been investing in both people as well as technology. That is what will hold us in good stead in the long run,” points out Shradha Suri Marwah.
That move has already paid dividends as Dr Ramesh K Shah, executive advisor (R&D), elaborates: “AC systems have to be customised for given applications depending upon the glass and metal areas, or interior volume of the vehicle, among other requirements. All these need to be considered for developing a cooling system. Every vehicle has a different instrument panel and we have to manage space adroitly to fit in our AC systems. This necessitates that we come up with the right designs and our R&D set-up helps us do that in a big way.” Within R&D, there is a planned customer focus in force. “We have specified groups for Maruti, Tata Motors, M&M and other customers. We also have a vendor development and testing area and a technical cell where we communicate with Denso on our designs,’ says Shah.
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Set up in 1985, Subros has evolved over the past two decades from a small assembly unit to the country’s largest and only integrated unit capable of manufacturing the entire air conditioning loop — compressors, condensers, heat exchangers and all the connecting elements. From an initial capacity of 15,000 AC units, the company’s output has grown to a level of 500,000 units per annum today.
Quality norms are very much in force. All the production lines incorporate extensive in-line quality checking equipment designed to ensure that quality is in-built into the manufacturing process.
The company hopes to gain a competitive edge by reducing product development cost and become self-reliant by investing heavily in R&D which involves product design, development and validation. The R&D facility enables virtual prototyping and simulation of various air conditioning components to help achieve optimum efficiency in design, space allocation, airflow and cooling under various climatic conditions. The design and analysis facilities include Catia V4 and V5, Unigraphics CAE (NASTRAN)/CFD.
The company has also set up a large and comprehensive validation centre for both component and vehicle testing. It comprises an environment test chamber (wind tunnel) with the capability of checking components in temperatures varying from -30deg C to +60deg C under varying speed and sun load conditions. There are also a calorimeter (bench test rig) and vibration test machines for component testing along with other equipment for endurance and reliability tests.
“Our existing set-up comprises an R&D centre along with the evaporator division; one unit for condenser manufacturing and compressor assembly, and the third plant is a die-casting unit which also houses the tool room equipped with state-of-the-art machinery such as CNC Machining Centre, WireEDM, and CNC EDM along with other conventional tool room machines.
"All new investments are going into the new plant at Manesar, Gurgaon. All assemblies are moving to Manesar and we are also moving some of the manufacturing there too. Those that are dependent on furnaces are not being moved,” informs Shradha Suri Marwah.
Recalling the situation that existed a few years ago, Pawan Sabharwal, general manager – marketing and service, says: “About two-and-half-years ago, we used to produce three lakh units, all of them consumed by our two main customers — MUL and Tata Motors. We could not even scout for new business because of capacity constraints. And, for product development work, Denso helped us in a big way. Now in the last couple of years, there has been a conscious effort to increase capacities and also set up an R&D and product development and validation facility that nobody has done in India. We have reached a stage where we are capable of starting from scratch — using only vehicle specifications, we can develop an AC. We can implement the entire product development, validation, testing and prototyping in-house”.
Once it achieved what it set out to do, Subros decided to look for new customers. “We targeted Mahindra and managed to get business. Now we are working on General Motors, which is very serious about a small car. We want to pitch in for this car because it is going to be a high volume product,” says Sabharwal.
Of its existing business portfolio, Subros has 100 percent business in most of Maruti’s models, except the Alto and Zen where it has a 70 percent share. In Tata Motors, its units are fitted in the Indica, Indigo, Safari and Tata 207; in the last three years Subros' business from Tata’s has grown from a 30 percent to 60 percent business share.
“The past few years have seen us carry out value engineering and localisation and as a result we have become price-competitive. So when Tata Motors decided to increase business, we scored on both the price front and also on quality,” says Sabharwal. This steady growth has seen Subros lead the pack of AC-makers in India with a 42 percent market share. Visteon is next with 27 percent followed by Behr and Sanden. “We now need to look at the overseas market. Compressors, condensers and evaporators can make good export products” says Sabharwal.
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Subros remains the only integrated manufacturer of AC systems in India. “We manufacture compressors which till now no-one else makes in India. We also produce condensers, cooling units, tubes and hoses and also carry out our own injection moulding and specialized casting work for our compressors,” says M K Puri, executive vice-president, manufacturing.
After the new plants go on stream, the Noida unit will continue to be the mother plant. “It will supply the compressors and other parts along with other components in raw form to Manesar. Eventually, we will be making a lot of parts in Manesar including compressor assemblies (only assembly parts), injection moulding, condenser, and assembly of cooling parts. The Noida plant will essentially manufacture compressors and some cooling systems,” informs Puri.
“We despatch around 1400 units every day, of which about 1000 go to MUL and 400 to Tata Motors. We cater exclusively to the OE segment and also supply parts like condenser cores, evaporators and compressors to OEMs and service engineers around the country,” he says.
Compressor parts for the AC units are cast in aluminium alloy at the Noida plant. The process known as squeeze casting and in some cases squeeze-and-vacuum die casting, which is unique to India and Subros is the only one doing it. “We have taken this technology from Toyota Industrial Corporation (TICO), a Toyota company which has a pact with Denso,” says Puri.
Capacity expansion projects are underway at the various plants. The existing combined capacity of five lakh compressors per annum is set to grow substantially to 7.5 lakh by this April. “We want to increase this to a million units by next year. Last year we produced 3.7 lakh compressors. This year we hope to make around four lakh units,” says Puri.
Around 550 people work on various machines at the Subros plants. “We are now mostly at a semi-automatic stage. Last year we procured new machinery that runs on its own for at least half an hour after it has been fed with material. This enables the operator to work elsewhere during
that time. "A few months ago, we upgraded equipment levels to another level where one man can operate two machines. The high level of automation allows the machine to load itself while the operator only monitors the movement of the material. Considerable automation is being effected at Subros,” adds Puri. The plant also got in a robot in the die-casting section that was installed a year ago.
The Maruti management story — production, time and quality management practices — has been replicated at Subros. Since 2004, the company has adopted the Maruti production system at its plants and in effectively doing so bagged MUL’s best company award for Tier II vendor upgradation and for superior performance through Kaizen.
How does the Maruti production system work? “For instance, there are seven stations on a single assembly line. If the cycle time of each person on a station is not equal, it means the person who is taking more time is controlling everything and the person who is spending less time is the idle person which is a waste. We divide the cycle time in such a way that everybody uses the same time. This is basically a technique by which we avoid and reduce wastage of time by each workman by deploying him in such a way that all the people on the assembly line are equally busy. There should be no time lag.
“This process involved shifting people from one plant to another. There are two aspects here. One is the skill matrix where we give our people a lot of training to operate a few machines. Once trained to a certain level, they are allowed to work on some other machines.
"Thus, in one assembly line, each worker can operate all the seven or eight stations. There is flexibility too. A fully-trained worker can be placed anywhere on the assembly line. In machine shops, there may be around 90 different kinds of machines,” explains Puri.
While there were instances of workers unwilling to undergo considerable training, with constant interaction and other HR initiatives, Subros learned that an average worker is keen to learn more.
This was seen in its Total Productive Maintenance (TPM) programme where the machines are maintained by the operator himself, a job he might not have done before. Now the operator has to clean it himself, ensure it runs optimally, and set right minor mistakes if need be. It is as if he owns the machine and this ownership requires a lot of mindset change, says Puri.
“In December 2005 we kicked off the TPM initiative guided by Professor Tsuda of Japan, an international expert in the subject. Even the president of the workers union fully supported the programme. We do not treat our workers as mere workers but as our associates. So if we explain our initiative, they are ready to come along with us. They are also aware of the increasing competition in the marketplace and that is the reason we are providing them training on high quality skills for problem-solving techniques. We believe that in modern-day management, shop-floor workers should be owners. There should be no inspector, no supervisor and the worker is solely responsible,” feels Puri.
Clearly, this is one company that does not believe in resting on its laurels. With growing sales of passenger cars with factory-fitted AC’s, the size of the market has increased sizeably, in turn drawing a lot of new competition. But the leader remains unfazed, creating capacity today for the business of tomorrow.